After re-listening to the March shareholder briefing here are...

After re-listening to the March shareholder briefing here are some of the points that I too believe will be important inflection points for the company near term.


* Nick said that some of Phylogica's current deals will be reaching those commercial licensing phases where their partners will have to pay very significant sums if they are to take their programs forward. Those will be RE-RATING events, not just from a financial aspect but also to see Phylomer (Phylogica's trademark for their peptides), given a candidate name from a pharma company and sitting in their pipeline, rather than just research work that Phylogica are currently doing. It will be clear validation.


* BIG funds will view this as a big re-rating i.e., when there's a Phylomer in the pharma's pipeline.


* Another re-rating event will take place when the same Pharma Co comes back for more and both Nick and Paul said that Phylogica are certainly in second stage discussions with current partners. Once investors see that the Pharma Co's are coming back for more, that'll be considered to be a major validation that the libraries are delivering what they're looking for.


* The third MAJOR re-rating event would be corporate venture funds from large pharma taking a stake in the company and what Paul has said is that they have had multiple discussions with those funds and that they're looking at building those sorts of components into their future deals.


* I believe that Phylogica will eventually crack all top 10 Pharma, and as we can see, they're getting very close with achieving that objective. There's a lot of momentum behind their deal doing right now. Once they've achieved this objective, is when I believe their Hybrid co-investment option will take a high priority (think Galapagos and MorphoSys).


* Paul mentioned that there are companies that have successfully executed on this hybrid model and a good ex is Morphosis in Munich or Galapagos in the Netherlands. Galapagos just ann a deal for $1.35bil deal in late February - $150 mil upfront, around an inhouse program that they developed. Galapagos, has exactly Phylogica's business model, where they do contract discovery for large pharma as their main focus, they get $100mil in Euros in revenue every year from this business model and they're able to use surplus cashflows from this business to invest in their own pipeline now, and one of those investments has paid off with the deal that they announced in late February this year.


Here's a great article on The hybrid business model. This gives us an indication of where Phylogica could go with this Hybrid Business model.


Paul Watt mentioned that Phylogica will not just be developing drugs themselves but will be co-funding - i.e., they'll be retaining an option to co-fund a development
with their partner, and in doing so, retain more downstream rights. So rather than just having $100mil of milestones and single digit royalties Phylogica will have a profit share, a substantial stake in a successful phylomer peptide.


Paul also went on to say that in terms of these Co-investment options that they are putting into their subsequent deals, that, it was important to note that these are at their election. They don't want the exposure to commit themselves to clinical development at this stage, obviously, because they're cash constrained, but, will be good to have this option in the future.


Based on the points highlighted above, I believe this option may arrive sooner than we think, and when this does, it will be when the game completely changes for Phylogica.